OUTLOOK FOR 2018? MORE GROWTH, MORE OPTIONS, STRONGER SECONDARY MARKET FOR TIMESHARE OWNERS

It's a brand new year and a brave new world for timeshare owners in 2018, where the only reliable constants are death, taxes, and rising maintenance fees. According to market forecasters contacted by RedWeek, a strong corporate economy in 2018 should generate new options, resorts, and experiences for travelers and timeshare owners. Moreover, the retail, resale, and rental markets should continue to improve as the overall US economy continues to bounce back from the financial crisis of 2008.

Timeshare Retail Sales Hit $10 Billion with More to Come

Timeshare developers enjoyed their eighth straight year of growth in 2017 and, barring a global catastrophe that makes people stay home, they are expected to rack up #9 in 2018. Now boasting owners in more than 10 million US households, the industry's major players still collect 50 percent or more of all sales from existing owners, who are much easier (and less expensive) to upsell than a brand-new buyer or, much worse, a millennial with money. Still, bringing in first-time and younger buyers remains a long-term priority for an industry that intends to stay relevant over the next decade. To reach that goal, developers and vacation clubs are offering more and more diverse vacation experiences — not just condo accommodations — to attract families who previously focused on specific resorts, bedrooms and bathrooms. Developers are also tinkering with shorter-term products to engage (generally younger) buyers who value spontaneity and shy away from lifetime contracts.

Thanks to the Internet, which is the great equalizer of all timeshare and travel information, timeshare developers are also scrambling to compete with fast-moving, instant reservation dot-com travel companies, such as Airbnb, to fill timeshare resorts. Already recognized as a major disruptor of the vacation rental market, Airbnb is valued at $31 billion and posts 4 million daily listings, including 1 million vacation homes. The company is also on an acquisition binge, buying other vacation companies to expand inventory as it scrambles to establish itself as the No. 1 travel company in the world. Frequently compared to Google and Facebook because of its meteoric rise, Airbnb is just one of several tech-and-data driven companies that are trying to reinvent travel — and make billions in the process.

The industry's dirty little secrets — an aging original owner base, coupled with a lackluster secondary market for timeshares — are finally getting high-level attention among the major timeshare companies. Developers have long railed against transfer companies that solicit timeshare owners to pay several thousand dollars in upfront fees to help them get out of timeshare contracts. Those legal attacks increased with a vengeance in 2017. At the same time, companies started rolling out consumer-friendly exit programs for some (but not all) of their longtime owners.

Welk Resorts, the privately held "family friendly" company headquartered in San Diego County, filed a federal lawsuit last July in California against "Timeshare Exit Team," a Seattle-based firm that advertises its services as a "consumer advocate," for, allegedly, running a nationwide racketeering scheme to interfere with Welk's customers and contracts. The lawsuit, which also targets the attorneys who work with Timeshare Exit Team, claims the company interfered with Welk's business by encouraging owners to stop paying maintenance fees, among other allegations, as part of a fraudulent program to extricate owners from legitimate contracts.

Timeshare Exit Team fought back the next day, saying the lawsuit "will not dissuade the organization from continuing to advocate for consumers." Its prolific advertising programs, both on the Internet and cable channels, continue to this day.

Ten days later, in early August, Diamond Resorts filed a similar-sounding federal lawsuit in Tennessee against the Castle Law Group and its principal, Judson Phillips. "The lawsuit is part of an ongoing effort by Diamond to arrest the behavior of timeshare third-party exit companies that plague the industry by preying on unsuspecting timeshare owners," the company said in a statement. "Third-party exit companies target and manipulate timeshare owners by soliciting services in exchange for excessive fees."

Phillips responded to the lawsuit by offering this quote to the Nashville Post newspaper. "[Diamond] doesn't like the fact that they sell a horrible product and they have untold thousands of unhappy customers. And, rather than fix the problems, they want to go after the attorneys who are fixing the problem."

While launching legal missiles at purported transfer companies, some developers also launched selective exit programs in 2017 that are expected to get more robust in the new year. The industry, after years of denying that the secondary market was a problem, took tentative steps in 2017 to address it.

Wyndham started the trend with its "Ovation" program three years ago, and Diamond followed suit in late 2017 by rolling out a "Transitions" program. These are not buy-back programs, but take-backs, where owners in good standing and no outstanding mortgage debt can give their timeshares back to the developer. There are catches to both programs, eligibility requirements and some fees, but they will work for some owners — and keep them out of the hands of third-party transfer companies. All the other major timeshare brands offer exit programs, as well, but they're not advertised — and they're only offered on an owner-by-owner basis.

Many legacy resorts, independents run by HOA boards of timeshare owners, also take back units, or foreclose on owners who go delinquent in their fees, but their operational problems are much more severe when juggling abandoned intervals. Legacy resorts must have robust resale and rental programs to absorb excess inventory. Those that don't must partner with major management companies, or vacation clubs, to handle the inevitable turnover in inventory as older owners just drop out of the travel market.

Rentals on RedWeek Rose Significantly in 2017

The best news from 2017, for timeshare owners, is that the rental market continued to grow while the resale market showed quiet signs of life.

RedWeek's full-service rental program, which launched in mid 2016 saw successful rental transactions nearly quadruple in 2017, with an average weekly rental price just over $2,300. The scope of resorts with full-service rentals rose from 163 in 2016 to 464 last year, a 285 percent increase. Marriott and Westin resorts dominated these bookings in 2017, with Marriott capturing 16 of the top-25 resorts and Westin taking four. The #1 rental resort was Marriott's Aruba Surf Club - RedWeek's most popular resort with the most timeshare rental availability of any resort on RedWeek - with over 1,000 weeks currently available - 16% of them with online booking.

Do-it-yourself rental successes on RedWeek increased 19 percent in 2017, but that number only reflects the number of owners who notified RedWeek that their rental was successful. Many owners do NOT report the results of their rental transactions.

Data from the full-service rental program should also help future renters and owners plan ahead. For example, bookings for Hawaii and the Caribbean (primarily in Aruba) and Hawaii were rented five-to-eight months prior to arrival, while bookings for US and Mexican resorts averaged three-to-four months prior to check-in.

Owners interested in RedWeek's full-service program can compare features here. To come in 2018, you can expect to see many more rental weeks on RedWeek that support online bookings and RedWeek Payment Protection. Owners who are interested in adding online payments to their postings can contact support for more information.

Resales Tracked by RedWeek Rose 76 percent in 2017

Closings in RedWeek's full-service resale program rose 76 percent in 2017, continuing a trend that has seen a 40 percent increase in closings, per year, since 2013. The average selling price, for all resorts, was flat at $4,800 per interval. The average selling price at major brand-name timeshares — Disney, Vistana, Hyatt, Marriott, and Hilton — was $7,260 in 2017, up 2 percent from 2016. Resales among the major brands also rose 59 percent last year, compared to 58 percent overall on RedWeek.

Here are some other sales trends that may inform owners in the future about what sells, what doesn't, and when. Sixty percent of all resales were for two-bedroom units, while 35 percent went for studio and one-bedroom suites. Three-bedroom units commanded only 5 percent of all resales on RedWeek. The most popular resale resorts were in Hawaii, Florida, Mexico, and California. The biggest changes, year to year, were recorded in Hawaii (resales dipped 8 percent from 2016), Mexico (up 6 percent) and California (up 5.2 percent).

So, here's to 2018 - where we are interested to watch what happens as developers move to address a new type of buyer, the secondary market, and exit solutions. RedWeek is confident that we will see the trends of the rental and resale markets continuing into 2018, and will have many more numbers to share next year, as the rental program is expanded.

About the author

This answer was provided by RedWeek's Chief Correspondent, Jeff Weir. Jeff is a California-based journalist who has covered California, Congress, and the White House. He also has roots in Silicon Valley, where he directed public relations and marketing programs for high-tech companies. He is also a timeshare owner and member of RedWeek.com.

10 Comments

joolvera

Jan 10, 2018 (1 year ago)

Love these articles. They are always well-written and very informative. Would be interested in reading a compre/contrast artcile about the Marriotts Destination Program. I think it's a scam and benefits Marriott more than owners. Thank you.

marionp8

Jan 10, 2018 (1 year ago)

Very interesting article. Keeps us informed. I too agree with Joelvera and would love to see a contrast article on Marriotts Destination Program.

cherylc367

Jan 12, 2018 (1 year ago)

thank you very informative.

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tracyl118

Jan 15, 2018 (1 year ago)

What is best way to find a monthly rental? Love Royal Islander, but listings are weekly. Looking ahead for 2019, month of February Thank you

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hoppern

Jan 12, 2019 (4 months ago)

So, what about how DRI coerces people with lies to sign timeshare and then we called within a week to say we didn't need a timeshare and now are stuck with it? First, we were told we were buying someone else's timeshare at a 9 year mortgage but the paperwork is for 13 years, or the fact that when my husband and I were wanting to talk it over and said we wanted to go outside, we were followed by the salesman so that we could not discuss it. Or that the maintenance fee would be fixed and never go up and, of course, that is not true. How is it we bought someone else's timeshare and yet they have told us we can't sell ours. And their Transitions is only if you pay off the mortgage in its entirety. If we end up paying 13 years, for supposed vacations for life, would you then relinquish it? They need to be investigated on a grand scale.

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